We strongly believe that even such complicated topics like VAT regulations should be standardized. That’s why we decided to design our software with the departure country as default taxation place.
WHAT DOES THAT MEAN FOR YOU?
You’ll always pay your VAT in the departure country as long as you are registered in it. What we mean by departure country is the country where your goods are selling from. Due to this, your invoices should always include the VAT rate of the respective country and your VAT number.
*distance sales are B2C sales from one EU member country to another EU member country.
In the next paragraph we will show you how to issue your invoices to your customers to be fully compliant.
It’s imperative that invoices are done correctly from the content and format perspective.
input VAT-output VAT= payable VAT Read more on VAT here.
Our Software take the departure country of goods as taxation point. So if you are selling goods from country A to country B, you will have to pay VAT in A, unless:
- You reached and skipped the threshold imposed in B
- You are deciding to pay VAT in country B for all sales made in country B even if you are under the threshold; this is opting out from country A
So for example you are selling goods from Spain to France. You will have to pay VAT in Spain unless you reached the 35.000 EUR/year threshold in France or you are opting out from Spain, when if in one of this 2 situation you will have to pay VAT in France.
HOW TO SET-UP YOUR INVOICE TO BE FULLY COMPLIANT
Currently there are 5 taxable transactions in EU, where VAT must be applied:
Supply of goods
Supply of services
Import of goods(issuance of invoice not necessary; B2B transaction)
Intra-community acqusition of goods((acquistion of goods within EU) B2B transaction)
Intra-community supply of goods
B2C sales (Business-to-Consumers)
The Invoice should always contain:
- Your business full name, address and the international EU VAT number, this is the EU VAT number contained in the VIES database.
- a unique and sequential identifying invoice number
- the date the invoice is issued
- date of transaction or payment if it's different from invoice issue date
- your customer's full name and address
- date of supply to the customer
- a description sufficient to identify the supply of goods or services
- the quantity of goods or services, with a unit price excluding VAT, and the rate of VAT per item,
- the total amount of payable VAT
- the total net amount payable (without added VAT)
- the VAT rate applied(percentage)
- total amount
Example of a correct invoice:
|1.)unique and sequential identifying invoice number||4.)your full name and address and VAT number||7.)description of goods and services||10.)VAT rate(percentage)*|
|2.)invoice date||5.) customer's full name and address||8.)date of supply to customer||11.)total amount including VAT|
|3.)date of payment if it's different from invoice issue date||6.)quantity of goods&services with net value and VAT rate, VAT amount and gross value||9.)total net amount(without VAT)|
*as you can see there are products with different VAT rates even 0, in case of multiple VAT rates this should be visible on the Invoice
For further assistance, don’t hesitate to contact us: firstname.lastname@example.org